FX Action: USD-JPY has put in a nearly one-week low FX Action: USD-JPY has put in a nearly one-week low of 120.87, with light stops reportedly kicking in on the move under 121.00. The pairing had been stuck inside of 121.10-20 since the N.Y. open. Ahead of the Fed, follow through is not expected, with talk of Japanese pension fund buying on dips noted.

11:25 EDT

Treasury Option Action: mixed flows are the rule Treasury Option Action: mixed flows are the rule in quiet pre-FOMC conditions, according to sources. These included bearish purchases of 2k in April 126.5/125.5/125 put butterflies and 5k in April 126/125.5 put spreads vs 10-year futures. And bullish purchases of 2.5k April 129/May 129.5 call diagonals and 10k May 129 calls vs a sale of 5k in May 128 calls, along with a sale of 5k in April 127 puts. June 10s are 9-ticks higher near 127-25 vs a 127-275 to 127-16 range with stocks lower into the Fed decision.

U.S. VIX just inadvertently plunged U.S. VIX just inadvertently plunged from highs of 15.87 to lows of 13.69 before rebalancing near 15.70 again, with details surely forthcoming. After predictions of increased volatility upon the lapse of "patience" by the Fed, this comes at a curious time ahead of the policy decision. That sent the VIX toward the lowest level of the month and is doubly dubious as a potential "fat finger" or "flash crash" trade as stocks opened lower, which should have supported vol.

09:45 EDT

Euro$ interest rate options: mixed positioning ahead of the Fed Euro$ interest rate options: mixed positioning ahead of the Fed decision follows yesterday's curve flatteners, with sources confirming a bearish purchase of 7.5k in Green April 77 puts and a bullish purchase of 2k in Front September 96/97/98 call butterflies. Underlying June 2015 futures are flat at 99.615, while the deferreds are 1-7.5 ticks firmer on the expectation that accommodation will remain part of the Fed's lexicon this afternoon given the economic pinch of the stronger dollar.

Stocks open in red as investors 'patiently' wait on YellenU.S. equity futures were weak throughout the pre-market trading session, leading to a lower open for the broader market. Investors are on Fed watch, awaiting the end of the central bank's two day meeting, and will be examining the Fedís accompanying statement for any change in language that would suggest the beginning of interest rate increases. Investors will also be watching the weekly energy inventory reports at 10:30 am EDT as the price of oil continues slipping towards $40 a barrel. In early trading, the Dow is down 77 points, the Nasdaq is down 18 points and the S&P is down 8 points.

Altering Fed guidance is likely to lead to increased volatility Altering Fed guidance is likely to lead to increased volatility according to WSJ Fedwatcher Hilsenrath in his preview (subscription) of this afternoon's decision. That's the upshot if the Fed drops "patient" as expected, while IMF Director Lagarde has warned this could be akin to the "taper tantrum" episode that boosted rates briefly. Recent data has been deteriorating somewhat, however, which could complicate the decision. That may be reflected in the Fed's quarterly forecasts and rate projections as well. This could be accompanied by more vague language on interest rates after the "measured pace" guidance of the past was seen as a failure. They are not seen reversing their still accommodative stance just yet and should be clear to reassure that rates will remain below long-term averages for some time.

08:35 EDT

U.S. equities are back on the defensive U.S. equities are back on the defensive as the Fed wraps up its 2-day meeting today with fresh guidance about the policy outlook, which will attempt to walk the line between opening up the flexibility to hike rates this summer, but without committing to that act. NYMEX crude is 2.5% lower again into the low $42s. The Dow is 85-points lower, S&P sank 8-points and NASDAQ fell 15-points in pre-open action. In Asia, Japan's N-225 rose 0.55% and the Shanghai Comp added another 2.13% on stimulus hopes, while the Euro Stoxx 50 is 0.28% lower after Grexit fears rekindled. Adobe Systems sank 4.5% after a sales miss, while Oracle gained 2.2% after decent dollar-adjusted gains and a boost in its dividend. Alibaba's IPO lock-up expires on Wednesday, potentially leading to selling pressure. Fedex reported a 53% jump in earnings in Q4, benefiting from lower fuel prices and restructuring, though forward guidance disappointed. Citi and Barclays are expected to settle and FX trading lawsuit for $800 M.

Joint Economic Committee to hold a hearingThe Committee holds a hearing entitled, "The Economic Report of the President" with Chairman Furman of the Council of Economic Advisers on March 18 at 2:30 pm. Webcast Link